An investigation by the Victorian Equal Opportunity and Human Rights Commission (VEOHRC) has revealed a “widespread and far-reaching” discriminatory practice of travel insurers refusing to cover mental illness.
The probe of three travel insurers and the data they relied on to support blanket mental health conditions comes four years after a landmark win of Ella Ingram, who was awarded compensation after her claim for a cancelled trip due to a mental illness was denied twice by her insurer QBE.
“It should've been, and it could've been a watershed moment for other insurers to look at their policies to try to determine whether they did have the basis to discriminate against people on mental health conditions. But it wasn't,” Commissioner Kristen Hilton told ABC.
The investigation found that between July 2017 and April 2018, Allianz, Suncorp, and World Nomads (now nib Travel) sold 365,000 policies containing mental health exclusions and denied hundreds of people's claims on the basis on mental illness.
“In terms of unlawful discrimination, we found that it was widespread and far-reaching," Hilton told the publication. “We have recommended that insurers contact all of the claimants that might have been affected by these discriminatory policies.”
Mental health exclusions mean policyholders cannot make a claim if their trip is affected by any kind mental illness, pre-existing or new. Such blanket exclusions are only lawful if backed by statistical data, showing the group as too high risk.
“In all the insurance that we looked at, we found that the data was either inadequate to justify the policy, it was out-of-date, or in some cases the data simply didn’t exist,” Hilton told ABC.
On the bright side, the three insurers that participated in the investigation, which represent more than a third of the industry, all agreed to change their policies and scrap blanket exclusions.
“The insurers that we worked with, were good to work with… there was a recognition that perhaps the industry had not moved in the way that community understanding and medical understanding of mental health conditions had,” Hilton said.
The commission said it will keep its eye on the insurers to ensure they take at their word to implement the eight recommendations resulting from the investigation.
“All insurers that were party to the investigation have agreed to change their policies or have already changed their policies in relation to blanket exclusions,” Hilton told ABC. “A number of them have also agreed to implement all of our recommendations. We've also said that we'll go back in six months’ time and look at what development and progress have been made and report on that.”
The Insurance Council of Australia (ICA) also said it had been working alongside its members to improve mental health-related coverage and outcomes for customers.
“Travel insurers responsible for most of the market had either removed exemptions or were intending to do so before this inquiry was instigated in 2017,” ICA's Campbell Fuller told ABC. “This trend has continued and soon insurers with more than 80% share of the travel insurance market will have removed blanket exclusions for mental health conditions, with cover also widely available for first-instance episodes of mental health conditions. Many insurers cover pre-existing mental health conditions on an individually underwritten basis similar to coverage available for pre-existing medical conditions.”